Bitcoin’s volatility is part of what makes it irresistible, said Willemien Kets, associate professor at the University of Oxford’s Department of Economics.
“We know from social psychology that the best way to get people hooked on something is to give them a reward on a very uncertain time frame,” Kets said.
Don’t fall into the trap. Checking the value of cryptocurrencies constantly is unproductive, Kets said.
“You can’t do anything about the price movement itself,” she said.
Instead she recommends people decide on a price point at which they’ll sell — say, if the asset drops below $10,000 — and set their phone to alert them at that threshold.
Jack Tatar, co-author of “Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond,” pointed to another reason why constant phone checks are futile.
“It’s very hard to realize the gains you see on your phone,” Tatar said. “These markets are not as liquid as the stocks and bond market. You can check your phone and see you’re up to $30,000, but if you wan’t to realize that gain, you probably won’t be able to do that.”
That’s because it can take days for a cryptocurrency transaction to complete, during which the value can change substantially. Despite his advice, Tatar admitted he, too, can’t look away.
“My son has tried to tell me to take a few days off,” he said. “But I just can’t.”